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Elizabeth Proust’s warning should be heeded, but boardroom quota for women is not the answer

Elizabeth Proust, the new chairman of the Australian Institute of Company Directors, has expressed support for quotas for women on boards. This will come as a significant boost for quota activists. The AICD is as conservative as it is influential – its members include the most powerful board members in the country – so a nod from the institute on quotas carries some weight.

Carrying even more weight is the fact that the highly regarded Proust, a distinguished company director and chairman in her own right, is a long-time critic of quotas.

The AICD has actively campaigned for more women on boards – including the introduction of scholarship and mentoring programs – with some notable success, albeit at a rate that has fallen short of activists’ expectations.

Since 2009, the proportion of female directors on ASX200 company boards has grown from 8.3% to 21.5% at the end of November 2015. In 2009, women accounted for just 5% of new board appointments; this year it’s 34%. These are good figures, but it’s also true that 28 ASX200 companies have no women on their boards – so there is still work to be done.

With Proust joining the cause, it’s not just activists who are saying that progress is too slow.

“When I started my career in the 1970s I never imagined that we would still be having this conversation 40 years later and the fact there has been so little change over time leads me to think there needs to be some action,” she says.

“If three years from now we have still not managed to achieve at least 30% female directors on all ASX200 boards then quotas is something that has to be put on the table as an option.”

Proust’s advocacy of quotas as an option to be considered in 2018 is more a shot across the bow than a full embrace of quotas, but it’s a shift in rhetoric, if not yet policy, nonetheless.

As recently as April, AICD CEO John Brogden argued against quotas. Instead, the AICD set a target for ASX200 companies: 30% of board positions to be held by women by the end of 2018.

“We believe that the director community setting its own 30% target is a better approach than a mandated quota imposed by government,” Brogden says.

“We have always said that companies should set their own measurable targets for gender diversity and to facilitate their efforts we are now nominating a standard that we consider appropriate.”

This of course invites the question: “What happens if that target is not met?”

This is the question Elizabeth Proust has answered: if you don’t hit 30% by the end of 2018, expect the government to step in. Self-regulate, or be regulated.

Perhaps it’s a dose of realpolitik that needed to be injected into this debate. Proust has made her warning more in sorrow and frustration than in a fit of feminist fury.

But is government fiat the answer? Progress is slow, but it’s progress nonetheless. If the proportion of women on ASX200 boards was stuck on 10% the need for government intervention would be more clear-cut.

But seeking government intervention because progress is below ideal is no progress at all.

Quotas: a wall between the enlightened and unenlightened

The obstacles to equal representation for women on company boards is about attitudes and cultures.

What we have been observing in the past decade or two is a welcome change in corporate cultures and male attitudes. Women in positions of power may not be the norm, but nor are they uncommon.

Government-mandated boardroom quotas would build an immediate wall between the enlightened and the unenlightened, with the latter feeling little or no need to reconsider long-held views or behaviours when gender simply becomes a compliance issue.

It has been recognised in recent years that diversity is not an end goal in itself. Without real inclusion in an organisation, diversity is just a human palette. Having one, two or three women on a recalcitrant board will not necessarily make it any less masculine or myopic. In any case, there is nothing to stop a male-dominated board from choosing women in their own image – be it conscious or unconscious bias at work.

The overseas experience is that imposing more women on company boards does not translate into more management and executive opportunities for women in the company proper. Quotas offer no cultural dividend.

There is more to the equal representation of women on boards than numbers alone.

The cultural, attitudinal and behavioural impetus behind the growing proportion of women on ASX200 boards is as important as the numbers themselves.

There is a lot of tosh spoken when it comes to presenting the case for more women on boards, and the AICD’s John Brogden, well meaning as he may be, is just one of many to make the “undeniable case for gender diversity on boards”.

“It is not only the right thing to do but the smart thing to do, because it means better business performance,” Brogden says. “Numerous pieces of research demonstrate a positive link between the level of female representation on boards and improved corporate performance.”

These surveys do no such thing. They establish no causal link whatsoever between the number of women on boards and the performance of their companies. There may be a whole range of factors at play. It might very well be the case that successful companies are more open to diversity and present as more attractive for professional female directors.

Intuitively, it makes sense that an organisation which recruits and promotes the very best talent – and has the systems and practices in place to ensure that they do – will have a workforce and leadership that is genuinely diverse.

Arguing for the greater inclusion of women on boards because surveys say it’s better for business is statistical sophistry; it also implies that were these surveys to establish the opposite case that companies would be entitled to discriminate against women. It would be equally spurious to point to a wayward chairman who is female, or a slapdash board that includes two or three women, and deduce that female directors are poison.

There is no need to invent reasons for the inclusion of more women on company boards and senior management positions: women are entitled to the same career opportunities as men, women are entitled to be as ambitious as men, women are entitled to work in an environment that does not present barriers to progress and fulfilment on the basis of their gender, and it is self-evident that the best and brightest women are as capable as the best and brightest men.

We do not need bogus surveys to tell us that the more diverse and inclusive a workforce and its management, the richer the pool of talent to choose from.

Accepting the case for quotas is simply raising the white flag in defeat. There would be nothing to celebrate were government to mandate quotas tomorrow.

Plainly, there are companies not giving women a fair go.

As Proust argues: “With the exception of engineering, women have been coming out of universities in roughly equal numbers as men in most disciplines for more than 25 years now so the argument there are not enough qualified women just doesn’t wash.”

The fact that women account for 20.5% not 30% of ASX200 positions is not reason to hoist the white flag. It is every reason to redouble efforts to make the case for change in corporate Australia, and to build on the success that has been achieved to date.

There has been much good work in this area. The AICD has done much of it, so has the ASX which in 2010 recommended that ASX-listed companies disclose in their annual reports achievements against gender objectives set by the board.

Organisations such as the UK-based 30% Club, which set up a chapter in Australia this year, prefer persuasion to mandatory quotas. The nub of their advocacy is that when women occupy 30% of positions on a board – presumably suitably qualified women – they are no longer novelty or token directors and are thus able to demonstrate their value.

One of the founders of The 30% Club in Australia, company director Patricia Cross, told Women’s Agenda in May:

“I have sat on seven listed boards and other government boards and when you have at least three women then gender ceases to be an issue but you get the benefit of diversity in thought around the table.”

Persuasion will make for a richer, more sustainable, diverse and inclusive corporate sector – with diversity hopefully not stopping at gender,

Writing for ANZ BlueNotes on December 15, after the Turnbull government brought down its innovation policy statement, Narelle Hooper, co-author of the book New Women, New Men, New Economy (Federation Press, 2015), makes a direct link between diversity and innovation:

“The most disruptive thing you can do for innovation is to mix things up on the people front. That means different genders, racial backgrounds, sexual orientations, ages, ways of thinking and disciplines. Diversity matters because the more different lenses you can bring to complex decision making and developing new products and services the less likely you are to get blindsided.”

The reasons for more women on company boards and in leadership positions is clear, although emphasis, focus and rhetoric may vary.

What is also clear is that the tide has turned. Change is happening. And if change is not happening quickly enough in Australia’s biggest companies, the rising generation of nimble, paradigm-busting digital businesses is setting a much brisker pace of workplace transformation that puts their bigger rivals on notice.

I get what Elizabeth Proust is saying: change, or have change imposed on you. One imagines she is hoping to put the fear of Government into some of her more wayward members. But quotas are neither necessary nor desirable.

There is no reason to assume that the 30% target cannot be reached by 2018. But if that is the thinking, then everyone who believes this is a fair and worthy target must simply work harder to achieve it.

Shame on us if we believe the only solution is a government-mandated quota.